TAIPEI, Taiwan — Taiwan’s economy grew at its slowest pace in three years in April-June, data showed yesterday, hammered by a plunge in its key export sector and falling demand in China.
The results underscore the challenge Taipei faces in diversifying from its traditional mainstays of electronics and hardware exports, as it tries to encourage tech innovation from smaller homegrown businesses as a way to boost the economy.
Growth came in at just 0.64 percent year on year in the second quarter, sharply down from 3.37 percent in the previous three months and badly missing a forecast of 3.05 percent, the Directorate General of Budget, Accounting and Statistics (DGBAS) said.
Compared with the previous three months, the economy shrank 7.65 percent.
Exports fell 9.81 percent as inventory of electronic products remained high and mainland China expanded supply chains within the mainland.
The soft reading came despite a 2.81-percent rise in private consumption, which beat expectations of a 2.75 percent increase.
DGBAS Expects 2.68% Growth for 2015
Wang Shu-chuan, a specialist with the DGBAS, said that if the agency only took into account the weaker-than-expected second-quarter GDP growth, Taiwan’s economy could be expected to grow 2.68 percent in 2015, lower than an expansion of more than 3 percent forecast by both the government and major think tanks.
But the actual result will depend on how the economy performs in the second half of this year, she said.
In May, the DGBAS cut its forecast for Taiwan’s GDP growth in 2015 to 3.28 percent from a previous estimate of 3.78 percent, citing slower exports and private consumption growth.
The DGBAS will update its forecast on Aug. 14.
Wang said the global economy showed signs of slowing down in the second quarter as demand appeared to weaken, and inventories in the electronics industry remained high, hurting Taiwan’s exports, the backbone of the country’s economy.
Wang said mainland China’s efforts to build its own supply chain in the manufacturing sector also compromised demand for products from Taiwan in the April-June period.